The operators of a Gloria Jean’s cafe at Caulfield in Melbourne have been fined a total of $110,500 after paying young, foreign students as little as $8 an hour.
The owner operators, Tsinman Fu and Ping Ostrovskih, have been penalised $17,500 and $13,000 respectively.
The Federal Circuit Court has also imposed a further $80,000 penalty against their company, Primeage.
The fines are the result of legal action by the Fair Work Ombudsman, which investigated a complaint from an employee.
Fair Work inspectors found that 22 casual employees at Gloria Jean’s Caulfield had been paid flat rates of $8 to $10 an hour, leading to them being underpaid a total of $83,566 between July, 2011 and April, 2013.
Many of the underpaid workers were international students from non-English speaking backgrounds, a third of them aged under 21.
Individual underpayments ranged from $219 to $17,103.
The employees were back paid only after the Fair Work Ombudsman commenced its legal proceedings.
Workplace laws relating to issuing of pay slips, providing meal breaks and keeping employment records were also breached.
In his judgment on the case, Judge Grant Riethmuller noted that inspectors had previously found that another company operated by Fu and Ostrovskih had underpaid an employee’s entitlements.
Riethmuller said that previous conduct would have ensured Fu and Ostrovskih were “well aware of their obligations and the seriousness of those obligations” – and their failure to implement a proper pay system showed “at best a reckless disregard of the obligations”.
The Court found Fu’s actions with respect to the underpayments were deliberate, observing that a “conscious decision was made to reduce wages when the business was not producing a sufficient income”.
Riethmuller said the impact on the employees had been significant and general deterrence was important, with the restaurant and hospitality industry having been recognised as “notorious for non-compliance”.
The Court dismissed submissions from Fu and Ostrovskih that the employees did not express any dissatisfaction in relation to their entitlements prior to the Fair Work Ombudsman’s intervention.
“It is common for employees, particularly in industries where pay rates are low and workforces are largely casual, to be wary of expressing any dissatisfaction for fear that their employment will not continue,” Riethmuller said.
Fair Work Ombudsman, Natalie James, says the agency made repeated requests for the employer to back pay the employees before commencing legal action.
James says the Court’s decision sends a message to others that blatantly underpaying minimum entitlements is a serious matter and will not be tolerated.
“We treat underpayments of young and overseas workers particularly seriously because they can be vulnerable if they are not fully aware of their workplace rights or are reluctant to complain,” she said.
“Successful litigations such as this also benefit employers who are complying with workplace laws, because it helps them to compete on a level playing field.”
